Contracts - General Issues - ANSWER Applicable law
Formation of contracts
Terms of contract
Performance
Remedies for unexcused nonperformance
Excuse of nonperformance
Third-party problems
Unilateral Contract - ANSWER results from an offer that EXPRESSLY REQUIRES perfor-
mance as the ONLY POSSIBLE METHOD OF ACCEPTANCE
Bilateral Contract - ANSWER ALL other offers → usually offer is silent as to the method of
acceptance
BILATERAL Contract UNLESS: - ANSWER 1) reward, prize, context; OR
2) offer expressly requires performance for acceptance
Quasi Contract - ANSWER equitable remedy
Common Law applies to - ANSWER Ks that are primarily for things other than goods (i.e.,
SERVICES, real estate)
Article 2 of the UCC applies to - ANSWER applies to Ks that are primarily for SALES OF
GOODS
1
,mixed deals - ANSWER General RULE: all or nothing; more important part
EXCEPTION: if K DIVIDES PAYMENT, then apply UCC to sale of goods part and common law to
rest
definition of contract - ANSWER an AGREEMENT that is LEGALLY ENFORCEABLE
1) look for an agreement
2) determine whether the agreement is legally enforceable
Things to look for when trying to find an agreement: - ANSWER 1) information about the
initial communication (offer)
2) what happens after the initial communication (termination of the offer)
3) who responds and how she responds (acceptance)
test for whether the initial communication is an offer - ANSWER manifestation of com-
mitment
manifestation - ANSWER words or conduct
offer - ANSWER a manifestation of an intention of one person to contract → words or
conduct showing commitment by one person
basic test for OFFER - ANSWER whether a reasonable person in the position of the of-
feree would believe that his or her assent creates a contract
Problems to Watch For - Content - ANSWER (a) missing PRICE term in SALES contract
(b) vague or ambiguous MATERIAL terms not an offer under either common law or UCC
(c) Requirements Contracts/Output Contracts
2
,how to handle a missing PRICE term in SALES contract - ANSWER -for a sale of real estate
(common law), price and description are required, not an offer
-sale of GOODS (Art. 2) → NO price requirement
vague or ambiguous MATERIAL terms - ANSWER material terms consisting of "appropri-
ate", "fair", or "reasonable" → NO offer
Requirements Contracts/Output Contracts - ANSWER -RULE: a K for the sale of goods can
state the quantity of goods to be delivered under the K in terms of the buyer's requirements
or seller's output → all, only, exclusively, solely
-REQUIREMENTS or OUTPUT CONTRACTS are not vague or ambiguous and ARE VALID
-increase in requirements: buyer can increase requirements so long as the increase is in line
with prior demands → NO unreasonably disproportionate limitation on increases
advertisement or price quote - ANSWER -RULE: an advertisement or price quote is NOT
an offer
-EXCEPTIONS:
i) an advertisement can be a unilateral offer if it is in the nature of a reward
ii) an offer can be an advertisement if it specifies quantity and expressly indicates who can
accept
iii) price quote can be an offer if sent in response to an inquiry
termination - ANSWER RULE: an offer CANNOT be accepted if it has been terminated; an
offer that has been terminated is dead
4 Methods of Termination - ANSWER 1) LAPSE of time → time stated in K or reasonable
time
2) DEATH of a party PRIOR TO ACCEPTANCE
3) WORDS or CONDUCT of offeror (i.e., REVOCATION of an offer)
4) WORDS or CONDUCT of the offeree: REJECTION
3
, DEATH of a party PRIOR TO ACCEPTANCE - Rule - ANSWER RULE: death or incapacity of
either party after the offer, but before acceptance, terminates the offer
EXCEPTION: irrevocable offers
**How an offer is revoked**: - ANSWER a) later UNAMBIGUOUS STATEMENT by offeror
to offeree of unwillingness or inability to contract (that the offeree is aware of); OR
b) later UNAMBIGUOUS CONDUCT by offeror indicating an unwillingness or inability to con-
tract that the offeree is aware of
NOTE: multiple offers does NOT constitute revocation
Which offers are irrevocable? - ANSWER irrevocable: no possibility
revocable: possibility
revoked: actuality
General RULE: offers can be freely revoked by the offeror
4 Situations in Which an offer is IRREVOCABLE: - ANSWER 1) Option Contract
2) UCC "Firm Offer Rule"
3) Reliance
4) *unilateral contract*
option contract - ANSWER an offer cannot be revoked if the offeror has not only made an
offer, but also:
(i) promised to not revoke (or promised to keep the offer "open"); AND
(ii) this promise is supported by payment or other consideration ("option")
-Example of Option K: S offers to sell B her car for $400. B pays S $10 for S's promise "not to
revoke the offer for a week."
UCC "Firm Offer Rule" - ANSWER an offer cannot be revoked for up to 3 months if:
4
Formation of contracts
Terms of contract
Performance
Remedies for unexcused nonperformance
Excuse of nonperformance
Third-party problems
Unilateral Contract - ANSWER results from an offer that EXPRESSLY REQUIRES perfor-
mance as the ONLY POSSIBLE METHOD OF ACCEPTANCE
Bilateral Contract - ANSWER ALL other offers → usually offer is silent as to the method of
acceptance
BILATERAL Contract UNLESS: - ANSWER 1) reward, prize, context; OR
2) offer expressly requires performance for acceptance
Quasi Contract - ANSWER equitable remedy
Common Law applies to - ANSWER Ks that are primarily for things other than goods (i.e.,
SERVICES, real estate)
Article 2 of the UCC applies to - ANSWER applies to Ks that are primarily for SALES OF
GOODS
1
,mixed deals - ANSWER General RULE: all or nothing; more important part
EXCEPTION: if K DIVIDES PAYMENT, then apply UCC to sale of goods part and common law to
rest
definition of contract - ANSWER an AGREEMENT that is LEGALLY ENFORCEABLE
1) look for an agreement
2) determine whether the agreement is legally enforceable
Things to look for when trying to find an agreement: - ANSWER 1) information about the
initial communication (offer)
2) what happens after the initial communication (termination of the offer)
3) who responds and how she responds (acceptance)
test for whether the initial communication is an offer - ANSWER manifestation of com-
mitment
manifestation - ANSWER words or conduct
offer - ANSWER a manifestation of an intention of one person to contract → words or
conduct showing commitment by one person
basic test for OFFER - ANSWER whether a reasonable person in the position of the of-
feree would believe that his or her assent creates a contract
Problems to Watch For - Content - ANSWER (a) missing PRICE term in SALES contract
(b) vague or ambiguous MATERIAL terms not an offer under either common law or UCC
(c) Requirements Contracts/Output Contracts
2
,how to handle a missing PRICE term in SALES contract - ANSWER -for a sale of real estate
(common law), price and description are required, not an offer
-sale of GOODS (Art. 2) → NO price requirement
vague or ambiguous MATERIAL terms - ANSWER material terms consisting of "appropri-
ate", "fair", or "reasonable" → NO offer
Requirements Contracts/Output Contracts - ANSWER -RULE: a K for the sale of goods can
state the quantity of goods to be delivered under the K in terms of the buyer's requirements
or seller's output → all, only, exclusively, solely
-REQUIREMENTS or OUTPUT CONTRACTS are not vague or ambiguous and ARE VALID
-increase in requirements: buyer can increase requirements so long as the increase is in line
with prior demands → NO unreasonably disproportionate limitation on increases
advertisement or price quote - ANSWER -RULE: an advertisement or price quote is NOT
an offer
-EXCEPTIONS:
i) an advertisement can be a unilateral offer if it is in the nature of a reward
ii) an offer can be an advertisement if it specifies quantity and expressly indicates who can
accept
iii) price quote can be an offer if sent in response to an inquiry
termination - ANSWER RULE: an offer CANNOT be accepted if it has been terminated; an
offer that has been terminated is dead
4 Methods of Termination - ANSWER 1) LAPSE of time → time stated in K or reasonable
time
2) DEATH of a party PRIOR TO ACCEPTANCE
3) WORDS or CONDUCT of offeror (i.e., REVOCATION of an offer)
4) WORDS or CONDUCT of the offeree: REJECTION
3
, DEATH of a party PRIOR TO ACCEPTANCE - Rule - ANSWER RULE: death or incapacity of
either party after the offer, but before acceptance, terminates the offer
EXCEPTION: irrevocable offers
**How an offer is revoked**: - ANSWER a) later UNAMBIGUOUS STATEMENT by offeror
to offeree of unwillingness or inability to contract (that the offeree is aware of); OR
b) later UNAMBIGUOUS CONDUCT by offeror indicating an unwillingness or inability to con-
tract that the offeree is aware of
NOTE: multiple offers does NOT constitute revocation
Which offers are irrevocable? - ANSWER irrevocable: no possibility
revocable: possibility
revoked: actuality
General RULE: offers can be freely revoked by the offeror
4 Situations in Which an offer is IRREVOCABLE: - ANSWER 1) Option Contract
2) UCC "Firm Offer Rule"
3) Reliance
4) *unilateral contract*
option contract - ANSWER an offer cannot be revoked if the offeror has not only made an
offer, but also:
(i) promised to not revoke (or promised to keep the offer "open"); AND
(ii) this promise is supported by payment or other consideration ("option")
-Example of Option K: S offers to sell B her car for $400. B pays S $10 for S's promise "not to
revoke the offer for a week."
UCC "Firm Offer Rule" - ANSWER an offer cannot be revoked for up to 3 months if:
4
